Wednesday, 9 December 2015

It was a rather wild day for the VIX, opening at 18.05, then cooling to the mid 16s, before surging above the key 20 threshold, settling +11.4% @ 19.61. With the break of the sp'2042 low, near term outlook is very uncertain, as there is threat the market will fall another 2-3% before next weeks FOMC.

VIX'60min

VIX'daily3

VIX'weekly

Summary

*I noted the VIX cooling to the mid 16s.. rather than the official intra low of 15.72.. as I consider it a rogue print. There was a secondary odd print at 3.25pm.. to 18.02.
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There was always threat the VIX would make a brief foray into the 20s before end year... but I am certainly surprised it happened today.

The door is clearly open to further equity downside before the next FOMC.

If the VIX can break/hold the 20 threshold.. upside would be the 25/30 zone.. as offered on the bigger weekly cycle.

US equities closed broadly weak, with the sp -15pts @ 2047 (intra range 2080/36). The two leaders - Trans/R2K, settled lower by -0.5% and -1.2% respectively. With the break of the 2042 low, near term outlook is very uncertain. There is high risk of the 2020/1990 zone.. as the market is increasingly anxious ahead of the Fed.

sp'60min

Summary

*closing hour action: an attempted rally from 2040 to 2052.
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It was a pretty wild day in market land... opening weak at 2056... soaring to 2080 across just 60mins... but then imploding to a four week low of 2036.

Despite the late afternoon attempt to recover.. with the loss of 2042, there is high threat of further weakness.

Cyclically we're due to rally tomorrow... but until we're >2080, the bulls should be very concerned... not least as the Transports look dire.

US equities remain broadly lower, with the sp' set for the third consecutive daily decline. USD continues to cool, now lower by a rather significant -1.2% in the DXY 97.20s. Metals are back to u/c. Oil is holding -1.0%, having utterly failed to hold the morning gain of >3.0%.

sp'60min

VIX'60min

Summary

It sure feels a long way up since the 'bullish sunshine' of high around 11am.

Its been a pretty wild day...

The VIX is offering a baby bull flag right now... and considering the break of the sp'2042 low.. there is threat renewed equity weakness into the close.

With a clear reversal from 2080... it has been a day for the bears.
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notable weakness.. AAPL -2.5%
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.. and I've not even covered the Transports today.... -0.6%.. breaking another cycle low in the 7500s.
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3.30pm.. Well, we've got a little rally.. .sp'2048.. but still.. even the 2050s won't do enough to negate the damage done.

The door is open for further weakness into next week... until 2080 is broken.. and HELD above.

Oil -0.6%... off the lows... but massively under the earlier gain of 3%.

Regardless of the remaining two hours of today, some serious technical damage has been done, not least with the recent sp'2042 low being decisively broken - as reflected in the VIX, back in the 20s. The market will remain vulnerable until this morning's high of 2080 is closed above.

sp'60min

VIX'60min

Summary

As ever... a turn in the 2pm hour is often the case.. but even a close in the sp'2055/65 zone is not going to do much to negate the damage done.

Clearly... Oil is still a major factor holding back the market....

USO'daily2

It is notable that despite morning gains of 3%.. Oil then reversed, breaking yesterdays low (at least for USO... which is trading a little out of sync with WTIC Oil).
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2.33pm.. Well.. its typical afternoon turn time.... with sp'2043...

As noted though.. even a rally into the close won't negate the tech' damage done.

VIX remains close to the 20 threshold...

... USD takes another few steps lower... -1.2%... DXY 97.30s.... currency markets now starting to wonder if rates will be raised too.

Price action is getting rather wild, as the sp'500 has seen a rather severe swing from the morning high of 2080 to 2037, with VIX breaking through the key 20 threshold. The USD continues to cool, -0.9% in the DXY 97.50s. Gold is catching a minor fear bid, +$1... whilst Oil -1.5%

sp'60min

VIX'60min

Summary

Here is a thought...

The 'unconscious entity' that is the US equity market... is it trying to spook the fed against raising rates next week?

When it comes to 'data dependency'.. we know the Fed really only care about one thing... the equity market.

With the break of the 2042 low.. there is open air to the next low/level of 2020/19. Any daily closes <2K.. and it'd be the excuse the maniacs at PRINT HQ are looking for to once again... back off.

Ironically.. another such refusal to raise rates would likely repeat the upset that we saw after the Fed failed to raise in May/June.
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VIX update from Mr T.

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stay tuned....

1.30pm...market trying to level out... sp'2036... with VIX 2013.

Regardless of any post 2.30pm recovery... .a break of support IS a break... and market will be vulnerable until a daily close >2080... and right now.. that sure does'nt look possible in the remainder of the week.

The sp'500 has seen a clear failure to break/hold first soft target of the 2080 threshold. Oil has similarly cooled from earlier gains, currently -1.4%. Regardless...the underlying upward pressure is still there. The only thing that could critically wreck Christmas is Yellen, and her economic cohort at the Fed.

sp'60min

VIX'5min

Summary

*I highlight the VIX for two reasons... First.. note the opening black-fail candle. Second, note the flash-print of 15.72 around 10.30am. The VIX computer is a little 'twitchy' this morning.
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So... a swing from 2056 to 2080... and back to 2055.

Clearly.. market is coiling up for something big.

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VIX update from Mr T. due

*no-show*

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time for tea :)

12.24pm... Any action <2047... would be a real problem

stay tuned

12.28pm..sp' sitting on rising support at 2048.. a very sig' swing of 32pts (1.6%) from the morning peak.

Oil is -1.1%... having swung from gains of around 3%.

notable weakness: AAPL -2.1%

12.30pm... and support fails to hold. Next up..2042.

VIX +9% @ 19.20. A break into the 20s would be a real surprise.

12.39pm... Its starting to turn into a train wreck.... 38pt swing in 2hrs... to 2042.. testing the recent low.

The opening decline of sp -9pts has seen a rather significant reversal, with the sp' +12pts @ 2076. First soft target is a daily close above the 2080 threshold, with the 2115/20 zone viable within a few days. With the EIA report showing a net draw of -3.6 million barrels, Oil is +1.3% in the $38s.

sp'60min

USO'daily2

Summary

As I noted yesterday, the setup was very similar to last Thursday. The fact we opened lower was a mere bonus opportunity for bears to exit and/or go long.

Now its just a case of whether we close above.. or below first soft target of 2080.

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notable gains...

miners, FCX, +8.9% , as the dividend is cut, the stock is clearly seeing a fierce short-stop cascade, as bears make a run for the exit door as the bad news is now out.

GDX +1.5%

Energy stocks...

APC +2.4%
RIG +3.2%
SDRL +7.1%

Although yes... all those stocks have been recently obliterated.. so even 15/20% into year end will only be a moderate recovery for the losses across 2015.

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Meanwhile in construction land.. aka.. London city...

Bullish winter shadow

Another rather great late afternoon sunset, and that is something I am truly bullish about.
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time to cook
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11.36am... A late morning cool down.... indexes almost back to flat... with Oil a touch red.

US equities open moderately lower, with an early low of sp'2056 and VIX maxing out at 18.10. Upside across the day looks probable, not least if the Oil market can begin a rally. USD is -0.6% in the DXY 97.80s. Metals are bouncing, Gold +$6, with Silver +0.9%. Oil is +0.8% ahead of the EIA report.

sp'60min

VIX'60min

Summary

A rather expected opening reversal. For those watching the micro 5/15/60min cycles... we had a clear opening black-fail candle in the VIX... with a mirror-upside reversal in equities.

Now its a case of how much the broader market can be dragged higher by Oil... which looks set to surge as energy bears rush to cover.
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First soft target is sp'2080, then 2093, 2104.. and 2115/20.

.. the last of which still looks relatively easy. The 2150s look a good broader upside target before end year.
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Good morning. US equity futures are moderately lower, sp -6pts, we're set to open at 2057. USD is cooling, -0.4% in the DXY 98.00s. Metals are bouncing, Gold +$5... whilst Oil is +0.5%, ahead of the EIA report.

sp'60min

Summary

So... we're set to open a little lower, but unlike yesterday, the declines are minor, and we should see the indexes turn positive by late morning.

The Oil report (10.30am) will likely be key. With API showing a net draw down, Oil will be vulnerable to at least a bounce to the $40 threshold.
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early mover..

YHOO +2%... as the company decides to keep the Alibaba part of the company, but sell the Yahoo part. What a bizarre reversal!

Arguably.. YHOO is now the worse run company in the western world... even more incompetently lead than AMZN. How many months until Melissa gets paid to walk away into the sunset?

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Update from Oscar

His highlighting of the Transports... very apt.
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Doomer chat, Hunter with Kirby

There is a great deal of nonsense talk in this interview.. not least about the precious metals. Make of it... what you will.
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Overnight Asia action

Japan: -1.0% @ 19301... the 20K threshold is looking out of range
China: +0.1% @ 3472... the 3800s by end month... difficult
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Have a good Wednesday
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9.39am.. A complete opening reversal.. with an initial black-fail candle in the VIX.

Whilst the broader market closed moderately lower, there was very significant weakness in the Transports, with a net daily decline of -2.8% @ 7663, just 3% above the Aug' low of 7452. If there is sustained trading in the 7300s, it will be a major warning of trouble for the broader market.

Trans, weekly

Trans, monthly2

Summary

The monthly chart sure is ugly. The Trans' has not seen a bullish green candle since Nov' 2014. The current red candle is absolutely bearish for the near/mid term.

The only issue is whether 7300s.. in which case.. next target would be 7K.

They (myself included) don't call the Transports the 'old leader' for nothing, and its something to keep an eye on into year end.
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Closing update from Riley

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Looking ahead

Wed' will see wholesale trade, and the latest EIA oil report.
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Interest rate chatter from the Schiff

Indeed, we're now just a week away from the Fed raising rates for the first time in around a decade. It will be a hugely important day for the US and all world capital markets. I am most most certainly looking forward to it, perhaps even more than for Star Wars VII.

US equities closed broadly weak, sp -13pts @ 2063 (intra low 2052). The
two leaders - Trans/R2K, settled lower by -2.8% and -0.4% respectively.
Near term outlook is for renewed upside.. first target remains the
2115/20 zone. More broadly.. the 2150s look viable, not least if the Fed
raise rates next Wednesday.

sp'daily5

R2K, daily

Trans

Summary

*the weakness in the Transports is decisive now... and we also have a break of trend in the second market leader - the R2K.

Right now, Tranports are a clear red flag warning about the broader market. Usually the main market... will follow.
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As for the sp'500... market was unable to hold the 200dma... and that leans in favour of the equity bears tomorrow.

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